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The winery was founded by the English doctor Dr Christopher Rawson Penfold (1811-1870) and his wife Mary in 1844 near Adelaide in the Barossa Valley (South Australia). This makes it one of the oldest Australian wineries. Penfold had studied medicine and was convinced of the health benefits of wine. He planted the first vineyard in Magill near his stone house, known as "The Grange" (small estate), using vines he had brought with him from France. For over 100 years, they mainly produced fortified wines in the sherry and port style and brandies, most of which were exported to England. After the founder's death, his wife Mary took over the management. She was succeeded in 1884 by her daughter Georgina and her husband Thomas Hyland. In 1881, the annual production was already around 500,000 litres.

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